Correlation Between Samsung Electronics and Sembcorp Marine
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Sembcorp Marine at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Samsung Electronics and Sembcorp Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Sembcorp Marine, you can compare the effects of market volatilities on Samsung Electronics and Sembcorp Marine and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Samsung Electronics with a short position of Sembcorp Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Sembcorp Marine.
Diversification Opportunities for Samsung Electronics and Sembcorp Marine
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Samsung and Sembcorp is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Sembcorp Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sembcorp Marine and Samsung Electronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Samsung Electronics Co are associated (or correlated) with Sembcorp Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sembcorp Marine has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Sembcorp Marine go up and down completely randomly.
Pair Corralation between Samsung Electronics and Sembcorp Marine
Assuming the 90 days horizon Samsung Electronics is expected to generate 18.47 times less return on investment than Sembcorp Marine. But when comparing it to its historical volatility, Samsung Electronics Co is 86.03 times less risky than Sembcorp Marine. It trades about 0.15 of its potential returns per unit of risk. Sembcorp Marine is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 176.00 in Sembcorp Marine on November 27, 2024 and sell it today you would lose (31.00) from holding Sembcorp Marine or give up 17.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.42% |
| Values | Daily Returns |
Samsung Electronics Co vs. Sembcorp Marine
Performance |
| Timeline |
| Samsung Electronics |
| Sembcorp Marine |
Samsung Electronics and Sembcorp Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Sembcorp Marine
The main advantage of trading using opposite Samsung Electronics and Sembcorp Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Sembcorp Marine can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sembcorp Marine will offset losses from the drop in Sembcorp Marine's long position.| Samsung Electronics vs. Universal Electronics | Samsung Electronics vs. VOXX International | Samsung Electronics vs. Sony Group Corp | Samsung Electronics vs. TCL Electronics Holdings |
| Sembcorp Marine vs. Austal Limited | Sembcorp Marine vs. Rolls Royce Holdings PLC | Sembcorp Marine vs. AAR Corp | Sembcorp Marine vs. Eve Holding |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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